Three Social Security secrets you probably don’t know

If you’re a baby boomer and you’re not on Social Security, you’ll be thinking about it soon… maybe. As financial consultant and estate-planning attorney Dan Caplinger explains on MotleyFool.com, there are Three Social Security Secrets You Probably Don’t Know.

Social Security is a critical part of how most people handle their retirement finances. But most people don’t know all the ins and outs of the Social Security program. Let’s take a look at three key facts about Social Security that you really ought to know.

1. Social Security helps far more people than just retired workers and their spouses.

Most people think of Social Security as being solely a program to support people after they retire. Yet according to figures from the Congressional Budget Office, only 70% of the 57 million people who receive benefits from Social Security are retired workers or spouses and children of retired workers. There are two other major groups of beneficiaries that draw benefits from Social Security.

Of these two groups, surviving family members of deceased workers, make up 11% of Social Security recipients, with spouses and certain minor and disabled children being eligible to receive survivors’ benefits under Social Security. An even greater proportion of Social Security recipients receive benefits due to disability, with disabled workers and their spouses and children accounting for 19% of all those getting benefits from the Social Security program. The numbers are similar when you look at total dollar amounts drawn, with retirees and their families getting 68% of the money Social Security pays out, while survivors get 14% and disabled workers and families getting 18%.

2. Many state and local workers don’t receive and aren’t eligible for Social Security.

Attorney Dan Caplinger

Some workers for government entities or educational institutions are covered by state or local pension plans. In some cases, those workers make contributions to their pension plans and pay Social Security taxes on their earnings, and in that case, they’re eligible for Social Security just like any other participant in the program.

If, however, a worker doesn’t pay Social Security taxes, then earnings won’t be included in that worker’s work history for Social Security purposes. If you work in such a job throughout your career, then you might never become eligible for Social Security at all, because you won’t have earned Social Security-eligible wages for the required 10-year period. Moreover, even if you held another job at another time in your career, your Social Security benefits could be reduced or eliminated based on how much you get from your pension plan.

3. Divorced spouses can still make claims for Social Security benefits using their ex-spouse’s work history, in some cases.

Married couples are entitled to spousal benefits based on each other’s work history. What many people don’t realize is that divorced ex-spouses can still make exactly the same claims.

To qualify for spousal benefits while your ex-spouse is still alive, you have to have been married to your ex-spouse for at least 10 years, and you must not have remarried. You can still receive benefits, though, if your ex-spouse has remarried. You can also be eligible for survivors’ benefits based on your ex-spouse’s work history after your ex-spouse dies, and you can even keep receiving them if you remarry, as long as you wait until age 60 or older before remarrying.